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2019 (11) TMI 273

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..... he Ld. Counsel for the Assessee that the Assessee suo-moto has already increased its assessable income for the relevant previous year ended on March 31, 2010 and further the said addition made by the AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. In the result, the Assessee’s appeal is partly allowed for statistical purposes. Disallowance on account of Provision for Bad and Doubtful Debts and provision for Arrears of Salary - HELD THAT:- After perusing the computation of income for the AY 2010-11), we note that Assessee suo-moto has already increased its assessable income by reducing its expenditure by an amount of ₹ 4,50,000/- and ₹ 5,00,000/- for the relevant previous year ended on March 31, 2010. Further, the said disallowance made by the AO tantamount to double disallowance, which in our opinion, needs to be verified at the level of the AO whether the same tantamounts to double addition or not and then decide the same afresh, .....

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..... n law in holding that the activities conducted by the Appellant are not in accordance with the objects of the Appellant society. 5. That the CIT (A) has erred in law and in facts in confirming the order of the AO wherein the AO has not allowed the accumulation of income of ₹ 2,25,84,589/- U/s 11(3) of the Act to the Appellant. 6. The Appellant craves leaves to add, alter or modify the aforesaid ground and craves leaves to file additional rounds. 7. The aforesaid grounds are taken without prejudice to each other. 2.1 The Grounds raised in Assessee s ITA No. 3082/Del/2017 (AY 2012-13) read as under:- 1. That in view of the facts and circumstances of the case the order passed by the CIT (A) and the assessment order is illegal, bad in law and without jurisdiction. 2. That the order of the CIT (A) is being assailed of being perverse, as the same is passed without considering the submissions of the Appellant, taking a holistic view of the matter and the ratio's of various case laws which have been relied by the Appellant. 3. That the CIT(A) has erred in law and in facts confirming the order of the AO wherein he has denied the exemption U/s 11 of the Act to the Appellant. 4. Tha .....

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..... the assessee on the basis of Income & Expenditure account submitted during the assessment proceedings. 4. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting addition as Gratuity expenses claimed in Income and Expenditure A/c as no documentary evidence for actual payment of the expenses was furnished during the assessment proceedings. 5. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2.4 The Grounds raised in Assessee s ITA No. 3658/Del/2018 (AY 2013-14) read as under:- 1. That on the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in upholding that the activities of the Appellant do not fall within the definition of charitable purpose, as defined under Section 2(15) of the Income- tax Act, 1961 ('the Act'). 1.1. That on the facts and circumstances of the case and in law the Hon'ble CIT(A) has erred in disregarding the order passed by the Hon'ble IT AT for Assessment Year 1973-74, violating the settled principles of judicial discipline and judicial decorum. 1.2. That on the facts and circumstances of the case and in law the .....

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..... ning of newspaper is not incidental to the objects of the appellant and that it is in the nature of business since the assessee itself has submitted audit reports in From 3CB and 3CD and resultantly, on the Hon'ble High Court of Delhi decision on Mehta Charitable Prajnalaya Trust." 5. That having regard to the facts of the case and in law, the Hon'ble CIT(A) has without an independent reasoning of the nature of the activities, placed reliance on earlier ClT(A) 's orders for Assessment Yea₹ 2010-11 and 12-13 confirming the impugned addition. 6. That the order passed by the Hon'ble CIT(A) is nonspeaking, cryptic and laconic in nature and violates the principles of natural justice, fair play and equity. 7. All of the above grounds of appeal are without prejudice and notwithstanding each other. The Appellant craves to add or substantiate any of the facts relatable to the instant appeal before/or at the time of hearing of the appeal. 2.5 The Grounds raised in Assessee s ITA No. 3659/Del/2017 (AY 2014-15) read as under:- 1. That on the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in upholding that the activities of the Appell .....

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..... to of Pandit Gopal Banhu Das, has erroneously concluded that the printing press is a business activity not quantifying as a charitable activity. 3. The Hon'ble CIT(A) has erred on facts and in law invoking Section 13(8) of the Act and thereby, sustaining an addition amounting to ₹ 24,586,358 on account if surplus earned from publication of newspapers. 4. That having regard to the facts and circumstances of the case and in law the Hon'ble CIT(A) has erred in affirming the impugned assessment order wherein it has been wrongly held that. "running of newspaper is not incidental to the objects of the appellant and that it is in the nature of business since the assessee itself has submitted audit reports in From 3CB and 3CD and resultantly, on the Hon'ble High Court of Delhi decision on Mehta Charitable Prajnalaya Trust." 5. That having regard to the facts of the case and in law, the Hon'ble ClT(A) has without an independent reasoning of the nature of the activities, placed reliance on earlier ClT(A)'s orders for Assessment Yea₹ 2010-11 and 12-13 confirming the impugned addition. 6. That the order passed by the Hon'ble CIT(A) is nonspeaking, .....

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..... nt has not been shown in the Income and Expenditure Account. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 3,47,18,749/- by holding that the assessee has already disclosed this amount in computation of income ignoring the fact that the AO while computing taxable income has started afresh from receipt as per income expenditure account and has not considered the additions already made in computation therefore there is no double addition in this case. 3. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. ASSESSEE S ITA NOS. 3081 & 3082/DEL/2017 (AY₹ 2010-11 & 2012- 13) & REVENUE S ITA NOS. 3648 & 3649/DEL/2017 (AY₹ 2010-11 & 2012-13). 3. The brief facts of the case are that the assessee filed its return of income declaring NIL income on 30.09.2010 which was selected for scrutiny by the Assessing Officer (AO) by issuing notice u/s. 143(2) of the Income Tax Act, 1961 (in short Act ) on 28.09.2011 and in response to the same the Authorized Representative (AR) of the Assessee appeared and furnished the details as requi .....

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..... vour of the assessee. The Department filed reference applications in ITAT for filing appeals to the High Court. Later on reference applications were withdrawn. The assessee is also taken the plea that the CBDT has also treated its activities as charitable. After considering the submissions of the assessee as well as law applicable in the case of the assessee, the AO was of the view that assessee is required to keep separate books of accounts and business should be incidental to attainment of its objective to avail exemption u/s. 11(4A) of the Act and in view of Section 2(15) which has been amended w.e.f. 01.04.2009 to curb such practices. In view of the amended section 2(15) of the Act from the assessment year 2009-10 any activity in the nature of trade / commerce/ business or any activity of rendering any service in relation to any trade, commerce or business; for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity will not be entitled for exemption u/s. 11 or section 10(23)© of the I.T. Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the natu .....

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..... 3648/ Del/2017 (Cross Appeals) Appellant Appeal: ITA No. 3081/ Del! 2017 Ground No.1 and 2: General in Nature Ground No.3 and 4: Addition of ₹ 6,00,34,647 /- on account of surplus generated from the activity of publishing of Newspaper. The said issue is covered in favour of the Appellant by the Hon'ble Tribunal Order dated September 17,2019 (copy enclosed and marked as Annexure 1- 9) passed in the Appellant own's case, ITA No. 4984/ Del/ 2015 for the Assessment Year ('AY') 2011-12. Ground No.5: Addition of ₹ 2,25,84,589/- on account of income deemed under the provisions of Section 11 (3) of the Act. The Appellant suo-moto has already increased its assessable income by Rs. ₹ 2,25,85,589/- for the relevant previous year ended on March 31, 2010. (refer computation of income for the Assessment Year 2010-11 placed as Annexure 10) Further, the said addition made by the Learned AO ('Ld. AO') tantamount to double addition. Ground 6 and 7 : General in Nature Departmental Appeal: ITA No. 3648/ Del/ 2017 Ground No.1: Disallowance of ₹ 4,50,000/- on account of Provision for Bad and Doubtful Debts and ₹ 5,00,000/- on account of provision fo .....

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..... nt Year 2012- 13 placed at Annexure 11) Further, the said addition made by the Ld. AO tantamount to double addition. Ground No.6 and 7: General in nature. Departmental Appeal: ITA No. 3649/ Del/2017 Ground No.1: Disallowance of₹ 59,32,500/- on account of Provision for Bad and Doubtful Debts and ₹ 1,00,00,000/- on account of provision for Arrears of Salary. The Appellant suo-moto has already increased its assessable income by reducing its expenditure by an amount of ₹ 59,32,500/- and ₹ 1,00,00,000/- for the relevant previous year ended on March 31, 2012. (refer computation of income for the Assessment Year 2012-13 placed at Annexure 11) Further, the said disallowance(s) made by the Ld. AO tantamount to double disallowance. Ground No.2: Addition of 1,42,65,366/- on account of Accumulation of income under section 11(2) of the Act. The Appellant suo-moto has already increased its assessable income by ₹ 1,42,65,366/- for the relevant previous year ended on March 31, 2012. (refer computation of income for the Assessment Year 2012-13 placed at Annexure 11) Further, the said addition made by the Ld. AO tantamount to double addition. Ground No.3: Addition of &# .....

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..... revious year ended on March 31,2013. (refer computation of income for the Assessment Year 2013-14 placed at Annexure 12) Also, the Appellant submits that it has duly considered the farm expenses of ₹ 20,22,411/- while suo-moto disallowing the agriculture income in its computation of income. (refer computation of income for the Assessment Year 2013-14 placed at Annexure 12) Further, the addition/ disallowance made by the Ld. AO of the above-mentioned amount(s) of ₹ 3,36,37,911/- and ₹ 20,22,411/- tantamount to double addition/ disallowance. Ground No.6 and 7: General in nature. Departmental Appeal: ITA No. 4207/ Del/2018 Ground No.1: Disallowance of ₹ 2,04,38,830/- on account of Provision of Bad and Doubtful Debts and ₹ 6,51,049/- on account of Provision for Arrears of Salary. The Appellant suo-mota has already increased its assessable income by reducing its expenditure by an amount of ₹ 2,04,38,830/- and ₹ 6,51,049/- for the relevant previous year ended on March 31, 2013. (refer computation of income for the Assessment Year 2013-14 placed at Annexure 12) Further, the said disallowance(s) made by the Ld. AO tantamount to double disallowance. .....

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..... g the agriculture income in its computation of income. (refer computation of income for the Assessment Year 2014-15 placed at Annexure 13) Further, the said disallowance made by the Ld. AO tantamount to double disallowance. Ground No.9: General in Nature Departmental Appeal: ITA No. 4049/ Del/ 2018 Ground No.1 and 2: Addition on account of Interest and Other Income amounting to ₹ 3,47,18,749/- credited in reserve fund. The Appellant suo-moto has already increased its assessable income by ₹ 3,47,18,749/- for the relevant previous year ended on March 31, 2014. (refer computation of income for the Assessment Year 2014-15 placed at Annexure 13) Further, the said addition made by the Ld. AO tantamount to double addition. Ground No.3: General in Nature A detailed chart summarizing all the Grounds of Appeal for AY 2013-14 is also enclosed and marked as Annexure 24 -25. Kindly take the above on record. Prayed Accordingly 4.1 In addition to aforesaid Written Submissions, Ld. Counsel for the assessee submitted that as regards the activity of publishing of news paper has been declared as Charitable vide ITAT, Delhi A Bench vide order dated 17.09.2019 passed in assessee s own case .....

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..... n India vs. ADIT(E)-III, Chennai (2017) 88 taxman.com 751 (Chennai-Trib.) - CIT vs. Sree Anjaneya Medical (2016) 74 taxamann.com 243 (SC). - ACIT vs. Grama Vidiyal Trust (2016) 71 taxamann.com 88 (Chennai -Trib.) - DCIT (Exemptions)-II, Chennai vs. Chennai Kammavar Trust (2017) 81 taxmann.com 365 (Chennai-Trib.) - ITO (E), Chennai vs. FRP Institute (2017) 88 taxamann.com 835 (Chennai-Trib.). 6. We have heard both the parties and carefully perused and considered the relevant records, the impugned orders, Paper Books filed by the assessee, Written Submissions filed from both the sides and the case laws relied therein. Assessee s Appeal No. 3081/ Del/2017 (AY 2010-11) 6.1 We find that Ground No.1 and 2 in Assessee s appeal are general in nature, hence, need not be adjudicated. 6.2 As regards Ground No.3 and 4 which is relating to Addition of ₹ 6,00,34,647 /- on account of surplus generated from the activity of publishing of Newspaper. We find that the said issue is squarely covered by the Order of this Bench dated 17.9.2019 passed in assessee s own case for the assessment year 2011-12 in ITA No. 4984/Del/2015 - ACIT(E) vs. Servants of People Society wherein the Tribunal has held .....

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..... . 6.2.1 Respectfully following the precedent, as aforesaid, the additions in dispute are hereby deleted and accordingly, the ground no. 3 & 4 are allowed. 6.3 As regards ground no.5 which is relating to Addition of ₹ 2,25,84,589/- on account of income deemed under the provisions of Section 11 (3) of the Act is concerned, after perusing the computation of income for the Assessment Year 2010-11 placed in Paper Book, we find considerable cogency in the contention of the Ld. Counsel for the Assessee that the Assessee suo-moto has already increased its assessable income by ₹ 2,25,85,589/- for the relevant previous year ended on March 31, 2010 and further the said addition made by the AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. In the result, the Assessee s appeal is partly allowed for statistical purposes. Assessee s Appeal No. 3082/ Del/2017 (AY 2012-13) 6.4 Following the consistent view as taken in ITA No. 3081/Del/2017 (AY 2010-11) .....

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..... of being heard to the assessee. We hold and direct accordingly. In the result, the Revenue s Appeal stands allowed for statistical purposes. Revenue s Cross Appeal : ITA No. 3649/Del/2017 (AY 2012-13) 7.3 Following the consistent view as taken in ITA No. 3648/Del/2017 (AY 2010-11), as aforesaid, the ground no. 1, 2 & 3 raised in ITA no. 3649/Del/2017 (AY 2012-13) are also set aside to the AO with the similar directions, as aforesaid, being the ground no. 1, 2, & 3 are exactly similar and common to the ground no. 1, 2, & 3 raised in ITA No. 3648/Del/2017 (AY 2010- 11). 7.4 As regards, ground no. 4 relating to disallowance of ₹ 18,31,216/- on account of Gratuity expense is concerned, we find that the details of payment of gratuity were submitted before the AO during the assessment proceedings and the said fact has also been accepted by the Ld. CIT(A) at para 11(v) Page 6 of her order, which does not need any interference, on our part, hence, we uphold the same and reject the ground no. 4 of the Revenue. In the result, the Revenue s Appeal is partly allowed for statistical purposes. Assessee s ITA No. : 3658/Del/ 2018 (AY 2013-14) 8. As regards Ground No.1, 2, 4 and .....

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..... he principle of consistency the AO was rightly directed to allow the exemption to the assessee u/s. 11(1) of the Act with all the consequential benefits by the Ld. CIT(A). Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we uphold the same and reject the grounds raised by the Revenue and accordingly, dismiss the appeal filed by the Revenue. 8.1 Respectfully following the precedent, as aforesaid, the additions in dispute are hereby deleted and accordingly, the ground no. 1, 2, 4 & 5 are allowed. 8.2 As regards Ground No.3 relating to Addition of ₹ 2,73,83,417/- on account of surplus generated from activities centered at Delhi & ₹ 3,36,37,911/- on account of Interest and other income credited in reserve fund for activities centered at Delhi and disallowance of farm expenses of ₹ 20,22,411/- are concerned, we find that addition of ₹ 2,73,83,417/- on account of surplus generated from activities centered at Delhi, the this issue is squarely covered in favour of the Assessee by the decision of the Tribunal dated September 17, 2019 passed in the Appellant own's case, ITA No. 4984/ Del/ 2015 for the Assessment Year ('AY& .....

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..... f ₹ 1,27,33,613/- on account of Accumulation of income under section 11(2) of the Act. The Assessee suomoto has already increased its assessable income by ₹ 1,27,33,613/- for the relevant previous year ended on March 31, 2013. Further, the said addition made by the Ld. AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. In the result, the Revenue s appeal is allowed for statistical purposes. Departmental Appeal: ITA No. 4049/ Del/ 2018 (AY 2014-15) 10. As regards Ground No. 1 and 2 relating to Addition on account of Interest and Other Income amounting to ₹ 3,47,18,749/- credited in reserve fund. We note that the Assessee suo-moto has already increased its assessable income by ₹ 3,47,18,749/- for the relevant previous year ended on March 31, 2014. Further, the said addition made by the AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition .....

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